Update: Dec 9, 2013 3:45PM

Signal:  Continue Long (entry price = $158)

We hope you have been enjoying the 8.8% run on Baidu since the algorithmic buy signal on 11/26.     This is a relatively new algorithm we are working with that uses dynamic calculations on each bar and therefore does not print a proprietary indicator, but it has been right on the money for us so far including an intraday algo we have running on Facebook.

From the chart pattern it appears that BIDU wants to go higher from here.  It put in a new 52week high and is right in the middle of a strong upward regression channel it has formed since January.   The current stop loss is a ‘disaster hedge’ in case markets completely fail, so it would be wise to tighten the stop to $162.26 lock in profit in case something disastrous does happen..

But we don’t see that happening with BIDU anytime soon.  All China names are being bought this quarter and we’re seeing the same bullish algorithmic patterns in a lot of stocks, which goes to show you how distorted markets have become because last year you couldn’t give away Chinese company stock as everyone thought the whole country was going to blow up, but it didn’t and it put in a bottom, and now all of the really wealthy people who have benefited the most from QE need something else to put their money into so why not into a geo-sector that was so beaten down the only positive fundamental going for it was that it couldn’t go any lower?

We’ll ride this wave with BIDU and our current position with CH, but the portfolio is looking a little China heavy.  We continue to scan all sectors and all countries for additional opportunities, but as we quickly tweeted this morning, “A number of algorithmic patterns that have worked well since June seem to be breaking down across the board. Possible EOY market cycle shift” – this doesn’t mean there aren’t opportunities, it means that new ones will start showing up very soon.  Stay tuned…

BIDU – it wants to go higher

 

Update: Nov 26, 2013

Signal: BUY (entry price = $158)

Yesterday the algorithm went long @ $158 but the stock continued to drop, re-testing the 20day EMA and other key fib support levels.  These levels held quite well and BIDU has now retraced back to the algorithm’s entry price.  We are going long BIDU based on a profitable trading pattern dating back to January of this year (green dashed lines).

 

BIDU Daily Chart – click to enlarge

 

Update: Nov 25, 2013

Signal:  EXIT SHORT – flat

The historical trading patterns of BIDU which the algorithm identified are clear which made us confident in the short position from 11/20 which we closed out today for a 2.94% gain.  The algorithm switched to long at the open, but BIDU continued to decline down to the 20d EMA which also happens to be the 50% fib retracement between the 10/30 high and 11/7 low.  If BIDU were to trend higher, this point would be a good place to do it.  We prefer to wait for the intraday price action confirm the move, which has not panned out today as of yet.  For now we remain neutral on BIDU.

Click image to enlarge

 

 

Update: Nov 24, 2013

Signal:  Continue Short from $163 – Stop moved to $163.27

BIDU continues to decline from our short price of $163 to the center of an up-channel from March 8 at $158 for a 3% gain on the trade to date. Further declines are expected from the algorithm and the Intellikon proprietary indicator confirms this.  We still have not seen any bearish news for the company, and the bad news out of China seems to have subsided.    We are moving the stop loss to $163.27 (from $166.26) to minimize risk of loss should the stock suddenly move against the trade.

Click image to enlarge

11/20/2013

Signal: SHORT

This morning we emailed the following signal to subscribers:

The algorithm went short BIDU this morning at $163.   BIDU failed to break the highs set in the past 2 weeks and with diminishing NASDAQ sentiment this could be a winner to the down side.

Part of our approach is to have the algorithms find clear, strong historical trading patterns first, then perform research to support the signals after.

Today BIDU closed at $158.71 for a 2.5% 1-day gain since the signal.   Most of the news for BIDU as been bullish to date, which is understandable as there has been no ‘bad news’ coming out of China, but we are starting to see some negative economic indicators which could be making investors run for cover from Chinese stocks.  Time will tell if this is a simple correction or an all-out flight to safety.  Either way, even though we dislike shorting any stock, this is starting to be a good looking trade.   We will continue to research the sector and post here as news develops.

Click image to enlarge